Dr

30 August 2007

NELSON MANDELA BAY

HUMAN RESOURCES DEVELOMENT STRATEGY

(PHASE 2)

DOCUMENT INFORMATION SHEET

Title of Report : Nelson Mandela Bay: Human Resource Development Strategy

Type of Report : Final Report

Prepared by : Nwabisa Vokwana & Duncan Grenfell

Organisation : Coega Development Corporation

Business Unit: Coega Human Capital Solutions

Date of Issue : 30 August 2007

PREPARED BY

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TABLE OF CONTENTS ACCRONYMS…………..……………………………………………………………………………7 SECTION OVERVIEW …………….………………………………………………………………..9

1 INTRODUCTION....................................................................................................................1-1

1.1 OBJECTIVES OF THE NELSON MANDELA BAY HRD STRATEGY ..................................... 1-1

1.2 WHAT INFORMS THE NMB HRD STRATEGY ...................................................................... 1-2

2 RESEARCH METHODOLOGY ................................................................................................. 4

2.1 GOALS OF THE RESEARCH PROCESS.............................................................................................. 4

2.2 RESEARCH APPROACH.................................................................................................................. 5

3 OVERVIEW: EASTERN CAPE & NMB CONTEXT................................................................. 10

3.1 THE DEMOGRAPHIC PROFILE.............................................................................................. 10

3.2 THE SOCIO-ECONOMIC STATUS OF THE EASTERN CAPE ............................................... 11

3.2.1 Overview of the Rural Economy: .......................................................................... 11

3.2.2 Poverty and Inequality ....................................................................................... 12

3.2.3 Structural Change and Sector Trends ............................................................... 13

3.2.4 Trade Performance............................................................................................ 15

3.2.5 The Spatial Distribution of Economic Activity in the Eastern Cape ................... 15

3.2.6 Nodal Developments ......................................................................................... 17

3.2.7 Overview of the Rural Economy: .............................................................……...18

3.2.8 The Nature, Size and Composition of the Labour Force in the Eastern Cape…………..21

3.2.9 Synthesis and Policy Implications .......................................................................... 24

3.3 THE IMPACT OF HIV/AIDS ON THE EASTERN CAPE’S ECONOMY AND LABOUR MARKET ................... 25

3.4 HRD PROFILE OF THE EASTERN CAPE ........................................................................................ 28

3.5 EDUCATION LANDSCAPE: OVERVIEW ........................................................................................... 31

3.5.1 Education Bands................................................................................................ 31

3.5.2 Further Education and Training (FET) (NQF Level 2-4): ................................... 32

3.5.3 DoE and Non-DoE Programmes in FETs:......................................................... 33

3.5.4 National Certificate Vocational (NCV):............................................................... 34

3.5.5 Nelson Mandela Metro FET Colleges:............................................................... 35

3.5.6 NMB Private Training Providers ........................................................................ 35

3.5.7 NMB DoE Technical Schools............................................................................. 36

3.5.8 Higher Education National Context:................................................................... 36

3.5.9 Nelson Mandela Metropolitan University: .......................................................... 38

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4 EDUCATION AND TRAINING CAPACITY: NMB ................................................................... 39

4.1 TECHNICAL SCHOOLS .......................................................................................................... 39

4.2 FURTHER EDUCATION AND TRAINING COLLEGES ........................................................... 40

4.2.1 FET Programmes............................................................................................... 40

4.2.2 . PUBLIC FET COLLEGES: NMB...................................................................... 41

4.3 PRIVATE TRAINING PROVIDERS: ACCREDITED..................................................................... 45

4.3.1 EASTCAPE TRAINING CENTRE (ETC)........................................................... 45

4.3.2 INDUSTRIES EDUCATION & TRAINING INSTITUTE (IETI) ........................... 46

4.4 OTHER PRIVATE TRAINING PROVIDERS: CETA ACCREDITED............................................. 48

4.5 SKILLS PROGRAMMES AND LEARNERSHIPS: ADDITIONAL................................................. 49

4.5.1 Construction Industry Training Providers: ................................. ……………….49

4.6 ENGINEERING INFRASTRUCTURE & FACILITIES: NMB REGION....................................................... 50

4.7 NELSON MANDELA METROPOLE UNIVERSITY (NMMU)................................................................. 50

5 OVERVIEW OF SKILLS ANALYSIS: Eastern Cape ............................................................... 54

5.1 NATIONAL OVERVIEW ........................................................................................................... 54

5.2 REGISTERED ENGINEERS IN SOUTH AFRICA................................................................................. 55

5.3. MERSETA SECTORS ................................................................................................................. 57

5.3 CONSTRUCTION SECTOR ............................................................................................................ 60

5.4 OVERVIEW: SKILLS SHORTAGES IN THE NMB................................................................... 62

5.4.1 Electrical / Mechanical Skills:............................................................................. 62

5.4.2 Manufacturing skills: .......................................................................................... 63

5.4.3 Building Skills :................................................................................................... 63

5.4.4 MBA: Skills in the Building Industry: Southern & Eastern Cape........................ 66

5.4.5 Projected Skills Shortages For Planned Mega Projects: ................................... 67

5.5 LEARNERSHIP TYPES AND SKILLS PROGRAMMES: NMB ................................................ 68

5.5.1 Construction Education and Training Authority (CETA): NMB .......................... 68

5.5.2 CETA Learnerships............................................................................................ 68

5.5.3 MERSERTA Apprenticeship and Learnerships: NMB....................................... 69

5.5.4 MERSETA In-house Skills Programmes ........................................................... 74

5.5.5 Possible skills challenges in the NMB ............................................................... 75

6 HUMAN CAPITAL DEVELOPMENT INITIATIVES: NMB ..................................................... 77

6.1 OVERALL CONTEXT ..................................................................................................................... 77

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6.2 ACCELERATED AND SHARED GROWTH INITIATIVE FOR SOUTH AFRICA (ASGISA) ........................... 77

6.3 INITIATIVE FOR PRIORITY SKILLS ACQUISITION (JIPSA): ............................................................... 83

6.4 NATIONAL SKILLS FUND: PROVINCIAL STRATEGIC PROJECTS........................................................ 84

6.5 SETA SKILLS DEVELOPMENT INITIATIVES .................................................................................... 86

6.6 CETA SKILLS DEVELOPMENT INITIATIVES: EC AND NMB .............................................................. 86

6.7 MERSETA SKILLS DEVELOPMENT INITIATIVE: EC AND NMB ....................................................... 87

Education and Training Quality Assurance (ETQA) :....................................................... 87

6.8 CHIETA: SKILLS DEVELOPMENT INITIATIVES: EC & NMB ............................................................ 94

6.9 ENGINEERING COUNCIL OF SOUTH AFRICA (ECSA) ........................................................ 95

6.10 ADDITIONAL REGIONAL INITIATIVES: NMB......................................................................... 98

6.10.1 MATHS & SCIENCE INITIATIVES IN THE EDUCATION SECTOR................. 98

6.10.2 . Automotive Industry Development Centre Initiatives (AIDC) initiatives......... 100

6.10.3 . Coega Development Corporation Initiatives ................................................. 103

6.11 SKILLS DEVELOPMENT FUNDING SOURCES ................................................................... 105

7 RECOMMENDATIONS ......................................................................................................... 107

7.1 THE HRD STRATEGIC LEVERS........................................................................................... 108

7.1.1 Human Capital Development Initiatives........................................................... 108

7.1.2 EDUCATION AND TRAINING INSTITUTIONS............................................... 111

7.1.3 SECTOR EDUCATION TRAINING AUTHORITIES ........................................ 113

7.1.4 BUSINESS....................................................................................................... 113

7.1.5 HRD ROLE PLAYER GROUP......................................................................... 114

7.2. RECOMMENDED IMPLEMENTATION PLAN: Urgent Areas .............................................. 115

8 CONCLUSION....................................................................................................................... 120

APPENDIX A-C

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ACCRONYMS

ABET Adult Basic Education and Training

AIDC Automobile Industry Development Centre

ASGISA Accelerated and Shared Growth Initiative for South Africa CDC Coega Development Corporation

CETA Construction SETA

CHIETA Chemical SETA

Coega HCS Coega HUMAN CAPITAL SOLUTIONS

DoL Department of Labour

DST Department of Science and Technology

ECP Eastern Cape Province

EDTA Economic Development Tourism & Agriculture

ELCONOP3 Electrical Construction Operations 3

EPWP Extended Public Works Programme

ESETA Energy SETA

ETC Eastcape Training Centre

FET College Further Education and Training College

FIFA Fédération Internationale de Football Association

FOODBEV Food and Beverage Sector Education and Training Authority

FTE Full Time Equivalent

GP Gauteng Province

HCFIS Human Capital Forecasting Information Management System

HE Higher Education

HEMIS Higher Education Management Information System

HRD Human Resource Development

HSRC Human Science Research Council

ICT Information and Communication Technology

JIPSA Joint Initiative on Priority Skills Acquisition

MBA Master Builders Association

MBDA Mandela Bay Development Agency

MEI&P Mechanical, electrical, instrumentation and piping

MERSETA Manufacturing, Engineering and Related Services SETA

MIG Municipal Infrastructure Grant

NBI National Business Initiative

NMB Nelson Mandela Bay

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NMBIC Nelson Mandela Bay Investment Council

NMBICC Nelson Mandela Bay International Convention Centre

NMMM Nelson Mandela Metropolitan Municipality

NMMU Nelson Mandela Metropolitan University

NQF National Qualifications Framework

NSA National Skills Authority

NSDS National Skills Development Strategy

OEMs Original Equipment Manufacturers

OFO Organising Framework for Occupations

PE College Port Elizabeth College (FET)

PIG Provincial Infrastructure Grant

RIDA Rapid Infrastructure Development Agency

RU Rhodes University

SAQA South African Qualification Authority

SDF Skills Development Facilitator

SETA Sector Education and Training Authority

SMME Small Medium and Micro Enterprise

SNF Shutdown Network Forum

SOE State Owned Enterprise

SSP Sector Skills Plan

TETA Transport Education and Training Authority

UCT University of Cape Town

UDDI Uitenhage Despatch Development Initiative

WSP Workplace Skills Plan

WSU Walter Sisulu University

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SECTION OVERVIEW

Section 1 is the introduction and discussion of the objectives of the human resource

development strategy.

Section 2 discusses the research methodology with a focus on research areas and research

constraints.

Section 3 gives a general socio-economic and education overview of the Eastern Cape

Province and the Nelson Mandela Bay.

Section 4 gives a brief overview of the education and training institutions and provides a

detailed account of the state of the education and training capacity in the Nelson

Mandela Metro. A detailed discussion of the capacity of FET colleges is provided.

Whilst the Port Elizabeth College is the biggest government funded FET College, the

report is silent on the capacity of the college. Numerous attempts, visits, emails,

telephone calls to obtain factual information about the college proved fruitless.

Section 5 is an overview of the skills situation in the Nelson Mandela Metro. The discussion

on the Metro is prefaced by a discussion on the skills situation at national level.

Section 6 provides a detailed discussion on the human capital initiatives underpinning

human capital development within the Metro. The section concludes with a discussion on

skills funding sources and funding constraints.

Section 7 outlines the recommendations that could form basis for implementing an HRD

strategy for the metro.

Section 8 is the conclusion.

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1 INTRODUCTION

The Nelson Mandela Metro Municipality, through its Trade & Investment Economic

Development, Tourism & Agriculture directorate commissioned the Coega

Development Corporation (CDC) to undertake a study that would result in the drafting

of the NMB’s human resource development strategy and plan. The objective of the

HR Development Strategy is to foster the process of building the region’s intellectual

capacity and understand the skills base of the region; influence and improve

international confidence and investor perceptions of the NMB economy; improve

productivity; reduce unemployment and increase the number of SMMEs.

The HRD strategy proposed has taken a holistic approach by analysing a range of

factors that impact on human resource development. In this regard the report details

the socio-economic situation of the Nelson Mandela Bay; provides information on some

of the key learnerships, apprenticeships and skills programme taking place in the

region; gives an informative view of the students enrolled and graduating from the NMB

based education and training institutions with the manufacturing, construction, chemical

and energy sectors; provides a brief over view on the private training provider capacity,

(that is) facilities and human resources, as well as a detailed matrix of the types of

skills, the trades and skill levels required for mega projects due to start in the NMB from

2007-2020. There is also a detailed analysis of the various skills development initiatives

and partnerships established by various stakeholders to address the human resource

shortages within the NMB.

1.1 OBJECTIVES OF THE NELSON MANDELA BAY HRD

STRATEGY

The Nelson Mandela Metropole (previously Port Elizabeth, Uitenhage and

Despatch municipalities) has a population of about 1.4-million people, 52% of

which are female. Port Elizabeth is also home to some of the largest automotive

and original equipment manufacturers (OEM’s) in the country. The Nelson

Mandela Metropolitan Municipality has experienced economic growth as well as

an increase in the number of people seeking employment.

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The HRD strategy will only focus on the manufacturing, construction, chemicals

and energy sectors. These sectors have been identified as the key strategic

economic sectors for the region.

The objectives of the HRD strategy will be:

• To make recommendations on the best approach and interventions that the

Municipality can undertake to create a pool of highly competent skills, at all

skill levels.

• To ensure the creation of sustainable and innovative partnerships, between

some of the key stakeholders.

• To ensure the support and funding of key human resource development

initiatives currently in existence in the NMB region.

• To ensure the integral participation of local business in the skills

development initiatives.

• To ensure the availability, accessibility, support and improvement to

engineering infrastructure and facilities.

• To ensure the nurturing of training provider capacity within these sectors.

• To consolidate and coordinate Grade 10-12 Maths and Science initiatives.

• To ensure the capacitation of Technical Schools and their support by

private business and local communities

• To establish an HRD Role player structure to ensure the implementation of

the future HRD Plan.

• To build Nelson Mandela Bay’s international image and reputation as a

leader in human resource development within the broad field of Science,

Engineering and Technology.

The objectives outlined above recognise that the municipality must play a

central and complementary role in providing incentives for pursuing human

resource development. The objectives also recognise the national and

provincial imperatives of utilising human capital as a competitive advantage in

attracting foreign direct investments.

1.2 WHAT INFORMS THE NMB HRD STRATEGY

� Interventions that will ensure the development of human resources across the manufacturing, construction, energy and chemical sectors are able to

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respond to current and future mega projects and upcoming investments of

the Nelson Mandela Bay. � Human capital development initiatives that exist in the Nelson Mandela Bay

region � Education and Training Institutions able to respond to skills training as well

as development of a well equipped human resources. � Develop and manage a central database that will enable a HRD

Forecasting for the Nelson Mandela Bay � Information and marketing initiatives by the municipality and key role players within these sectors for the promotion and attainment of a

consolidated and integrated HRD programme.

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2 RESEARCH METHODOLOGY

In compiling the document, desktop and field research was undertaken in order to

respond to key research items as outlined below. Emails, telephonic and face to face

interviews were also conducted with a range of stakeholders.

In addition to the interviews, the team carried out site visits to inspect the training

facilities used at the East Cape Midlands College, Eastcape Training Centre and Port

Elizabeth College (Russell Road) and Ilitsha Holdings (see appendix 1).

Other sources for information were sector Work Place Skills Plans; organisational

websites and documentation, relevant databases such as the Department of Labour

unemployed database, Nelson Mandela Metropolitan University databases, research

reports, etc. Where possible the research team has attempted to ensure that all

research data is relevant and up-to-date. Reference to sources shall be reflected in

footnotes.

2.1 Goals of the research process

The primary goal of the research is to draft the NMB HRD Strategy through

conducting analysis that will include:

1. Conducting a skills audit in the NMB to determine the availability of skills

as identified in the short term skills matrix developed under Phase 1 of

the NMB HR Development Plan.

2. Conducting a gap analysis between the demand for skills and skills

availability in the region.

3. Analysing of the education and training institutional capacity in the NMB

to meet training demands.

4. Reporting on the state of facilities in education and training institutions,

used to meet skills development requirements.

5. Outlining current NMB initiatives being undertaken in the region aimed at

addressing the skills shortages.

6. Identifying funding opportunities to address skills development initiatives

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2.2 Research approach

The approach adopted is outlined for each item as follows:

Research Item (1 & 2):

Conduct a skills audit and a skills gap analysis in the NMB to determine the

availability or non-availability of skills as identified in the short term skills matrix

developed under Phase 1 of the NMB HR Development Plan.

In undertaking the skills audit and skills gap analysis the research team looked

at the NMB projects planned for the next five years, inclusive of the Vision 2020

projects of the NMBM (reference given to the report conducted for the NMB by

the LBMS1); projected investment pipeline of projects for Coega IDZ and the

2004 Motherwell Skills Audit undertaken by the former University of Port

Elizabeth. Where data is available the team looked at the local private sector

future investments. However the latter has proved to be particularly difficult as

private companies consider such information as confidential in nature.

To enable a full understanding of the skills available in the NMB region the team

interrogated information from the local bargaining councils of the different sectors

(construction, manufacturing, chemical, metals and related); the Department of

Labour’s unemployment database, CDC HCS database and research conducted

by NMMU.

The skills development legislation requires all companies to provide information

on their human resource development plans on an annual basis. One of the

objectives of such an excise is for the companies to report to their relevant SETA

on the current status of their workforce. The relevant SETAs for this project are

MERSETA, CETA and CHIETA.

Detail will be reported as national, regional (Eastern Cape) and local (bargaining

councils) information. In addition, the report will include information from

professional councils, whose key functions is the registration of personnel

against particular unit standards. The registers provide an indication of 1 Dated June 2006

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individuals entering the professions each year. The most relevant profession for

this study is the Engineering Council of South Africa (ECSA). The report outlines

all the personnel registered with the council.

The discussion of this item is contextualised in a discussion of the demographic

profile of the population residing in the NMB. The research team also consulted

HSRC research conducted in the Eastern Cape Province, 2005 Household

Survey, 2006 Labour Force Survey and Census statistics of persons residing in

the NMB.

Research Item (3 & 4):-

Conduct an analysis of the education and training institutional capacity that exists

in the NMB to meet the demands identified in Phase 1 of the NMB HR

Development Plan as well as report on the state of facilities used to meet skills

development requirements and training.

Higher Education and Further Education and Training institutions play a critical

role in ensuring that training and development appropriate and required human

resource capacity in any context. The recent restructuring in both the further

education and training and higher education sector has presented institution with

both opportunities and challenges. For instance, all newly merged or

incorporated education institutions are required to provide the national

Department of Education institutional operating plans (IOP’s). An IOP must

stipulate an institution’s change scenarios that will enable an institution to plot out

the anticipated financial outcomes of pursuing particular strategies or options and

thereby assist them in making a “best case” choice. Each change scenario must

reflect operating income and expenditure estimates and include: implications for

teaching, learning and research activities, as well as support services; proposed

changes to institutional infrastructure, property, plant and equipment and the

means for financing each project.

The NMB has also been affected by the recent changes in the education

landscape. The FET sector saw the creation of two mega public colleges, the

Port Elizabeth Public College and the Eastcape Midlands Public College.

Relevant information was requested from them. The Nelson Mandela Metropole

University is a new university made up of the former Port Elizabeth Technikon

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and Universities of Port Elizabeth and Vista (PE Campus). The research team

has been given access to the NMMU’s IOP document and this will assist in

understanding the intended strategic direction of the university and how as such

it such relates to the human resource development needs of the NMB region.

The NMMU has also given us access to their current figures in different areas of

specialisation within which students are enrolled and graduate. This information

will be complemented by information received the national Department of

Education.

A spreadsheet on evaluating the training facilities was compiled as a basis for the

site visits and collection of data on the status of engineering facilities. The

continuous upgrading and maintenance of facilities in education and training

institutions is critical in meeting the skills development requirements of the

region. Thus information on the current structural resources used for the

implementation of human resource training in the NMB will be outlined.

Education institutions play a pivotal role in providing local business and foreign

investors with the requisite skills. The academic and research capacity of higher

education institutions in South Africa are playing a key role in ensuring the

resources are in place. Research and development capacity and specialists’

skills are located within higher education institutions. This report shall outline the

capacity of the NMB based education institutions, in particular the NMMU, PE

Public College, Eastcape Midlands Public College as well as the capacity of

private education providers located in the NMB. Thus the team developed a

portfolio of current and planned specialist academic and research programmes

that are offered by education institutions in the region.

Research Item (5 & 6):-

Outline current initiatives aimed at addressing the skills shortages identified in

the HR Development Strategy and Plan and identify funding opportunities to

address skills development initiatives.

A number of initiatives have been undertaken by government and quasi-

government organisations to address the shortages of skills in the South African

economy. These initiatives have recently been taken to a higher level through the

introduction of the of the ASGISA and JIPSA government initiatives. Professional

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bodies also play a key role in addressing skills shortages. For the purposes of

this research our focus is on the ECSA initiatives. The Sector Education Training

Authorities have continued to play a crucial role in ensuring skills development.

For this report the research team has only outlined initiatives by MERSETA,

CHIETA, ESETA and CETA.

Within the NBM area, there are several initiatives aimed at ensuring the

development of human resource capacity in the region. These are outlined in

detail.

Research item 7:-

Make recommendations on the key strategic interventions needed for to ensue a

functional regional co-ordinating structure for human capital development .

The NMB has in place an Economic Development Tourism and Agriculture Unit,

which amongst other things is tasked with ensuring the development and

implementation of a viable human resource development strategy for the metro.

As part of this mandate the EDTA unit has a human resource reference group.

The composition as well as the terms of reference of the HRD Reference Group

needs to be revised so that they effectively articulate as well as align to the

provincial and national HRD strategies. The research team interacted with key

stakeholders on how the composition of a revised HRD structure. The report

makes suggestion on the need to create sector specific sub-structure.

Research Constraints

A major challenge has been time constraints. Obtaining NMB specific information

on a range of issues has proved most difficult. This difficulty is influenced by the

lack of survey data conducted for the NMB. The research has also been

hampered by the development of Sector Skills Plans (SSP) by the various

SETAs. Most SSP will be available in public domain from late April and the first

week of May.

After numerous attempts the research team was not able to obtain information

from the Port Elizabeth Public College. Various attempts were made to obtain

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basic information about course offerings, numbers of students and quality of

facilities for the engineering department, yet these attempts were fruitless. This

has compromised this report as it does not give the full picture of the FET Sector

in the NMB region.

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3 OVERVIEW: EASTERN CAPE & NMB CONTEXT

3.1 THE DEMOGRAPHIC PROFILE

The Eastern Cape lies on the south-eastern seaboard of South Africa and is the

country's second largest province. Its population is just over 6, 9 million, about

15% share of the South African population. The geographical spread of the

region is close to 168 966 square kilometres, which is about 41 people per

square kilometres. Whilst one can safely say that all people with basic education

have some command of the English language, isiXhosa is the first language

spoken by approximately 83.4% of the EC population, Afrikaans is a first

language to about 9.3% and English is a first language to about 3.6% of the

population. The capital town of the province is Bhisho, located about 300

kilometres South East of Port Elizabeth with Port Elizabeth being the major city.

The Nelson Mandela Metropole (previously Port Elizabeth, Despatch and

Uitenhage municipalities) has a population of about 1.4-million people, 52% of

which are female. Port Elizabeth is also home to some of the largest automotive

and original equipment manufacturers (OEM) in the country.

Gender and Race Population breakdown2

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2 Data source: Household Survey 2005 3 Data source: Census 2001. However current population estimates stand at 1.4 million

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3.2 THE SOCIO-ECONOMIC STATUS OF THE EASTERN CAPE

In order to set the context for the analysis of labour market trends in the Eastern

Cape, below is an analysis of trends in the provincial economy in the 1996 –

2002 periods. Given that economic growth and its character determine the

demand for labour, this is an essential causal factor that explains trends in

employment and unemployment.

3.2.1 Overview of the Rural Economy: Agricultural Production, Livelihoods and Employment:

In terms of its relative position within the national economy, the Eastern

Cape is home to 15% of South Africa’s population, but accounts for only

7% of its GDP. Consequently, in terms of output per capita, it is South

Africa’s second poorest province after Limpopo, with per capita income

well below the national average and less than a quarter of that of

Gauteng and the Western Cape.

5 Source: SA General Household Survey 2005

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During the 1996 – 2002 periods, the Eastern Cape’s annual average

growth rate of 1.9% was well below the national average of 2.5%, and

the second lowest of South Africa’s nine provinces. This is an indication

that the province has been falling behind the more prosperous provinces

in the post-apartheid period. Per capita output has, however, grown over

the 1996 – 2002 period, due to economic growth outstripping population

growth.

The structure of the Eastern Cape economy differs markedly from the

national economy in two respects: the mining sector is much smaller and

the tertiary sector considerably larger compared to other rural provinces

such as Mpumalanga, Limpopo and Kwa-Zulu Natal. In addition, in the

primary sector, agriculture is a larger contributor to output in the Eastern

Cape than is the case for the national economy. As a result the tertiary

sector, the financial and trade sub-sectors account for a relatively higher

proportion of output than is the case for the national economy.

In terms of human development, the province has made progress during

the 1996 – 2002 periods, as evidenced by an improvement in its human

development index (a composite index of life expectancy, literacy and

income) from 0.49 to 0.53. However, it remains the second lowest of

South Africa’s 9 provinces, after Limpopo.

3.2.2 Poverty and Inequality

The legacy of apartheid weighs heavily on the Eastern Cape, particularly

because it incorporated two former homelands, Transkei and Ciskei. In

2002, the Eastern Cape had the highest level of poverty and inequality of

South Africa’s 9 provinces. Critically, between 1996 and 2002, the

percentage of people in poverty in the Eastern Cape increased by a

massive 14 percentage points, from 54% to 68%, far exceeding the

growth in poverty at a national level.

Given that economic growth exceeded population growth in the 1996 –

2002 periods, it would be reasonable to expect some eradication of

poverty. However, growing inequality has meant that the benefits of

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economic growth have been unequally distributed, thereby contributing

to a growing poverty rate. Indeed, with a Gini Coefficient (the most widely

used summary statistic of income inequality) of 0.64 in 2002, the Eastern

Cape had the highest level of inequality of South Africa’s 9 provinces.

While growing inequality has been a national trend in the post-apartheid

era, it has grown faster in the Eastern Cape than nationally.

3.2.3 Structural Change and Sector Trends

The structure of the Eastern Cape economy differs from the national

economy in two respects: the tertiary sector accounts for a higher

proportion of output and the primary sector for a smaller proportion. This

is primarily because there is almost no mining activity in the province.

The tertiary sector has been growing the fastest over the 1996 – 2002

periods, followed by the secondary and primary sectors. In all cases

growth has been significantly below that of the national economy.

Agriculture is the most important source of output in the primary sector,

accounting for over two-thirds in 2002. Forestry accounts for just under

one-third of primary output. In the secondary sector, manufacturing is

dominant, accounting for 82.6% in 2002 and growing at an annual

average rate of 1.6% in the 1996-2002 periods.

The transport equipment (i.e. automotives) sub-sector is both the largest

contributor to the secondary sector, accounting for 26% of its output in

2002, and the fastest growing. Another sub-sector that plays an

important role in the provincial economy is fuel, petroleum, chemical and

rubber products, accounting for 14.6% of secondary output in 2002. The

food, beverages and tobacco products industry accounts for 10.4% of

the output of the secondary sector, but has been contracting at an

average rate of –1.7% over the 1996-2002 period. Other important

industries in the manufacturing sector are furniture, metal products,

textiles, clothing and leather, wood and wood products and electrical

machinery and apparatus. With the exception of clothing and textiles,

these industries have all been growing during the 1996 – 2002 period.

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The expansion of the tertiary sector in the Eastern Cape has been the

most significant structural change in the provincial economy in the post-

apartheid period. The community services sub-sector is dominant,

accounting for 45.4% of output in 2002. This sector is dominated by

services provided by government such as health and education and has

been growing at a slow annual average rate of 0.4% during the 1996 –

2002 period. In the analysis of the Eastern Cape’s 7 sub-regional

economy’s it is striking that in the district councils that were formerly

homelands, community services account for as much as 50% of

economic output.

The fastest growing sectors (by annual average growth rate in the 1996

– 2002 periods) are post and telecommunication (13.4%), activities

auxiliary to financial intermediation (11.5%) and financial intermediation

(7.8%). The fourth largest sector, retail trade and repairs of goods have

been growing at an annual average rate of 3.1%, above the national

average of 2.7%. Four sub-sectors have been declining, as measured by

annual average growth rates in the 1996 – 2002 periods: water transport

(-26.6%), hotels and restaurants (-1.6%), wholesale and commission

trade (-0.9%) and sale and repair of motor vehicles (-0.4%). Apart from

water transport, none of these sectors have contracted at the national

level.

Broad structural change between 1990 and 2002 is such that all the sub-

sectors within the primary and secondary sector have declined in terms

of their contribution to the province’s gross value added. In contrast, with

the exception of trade, all the sub-sectors in the tertiary (or services)

sector have expanded during this period. In relation to South Africa’s

other provinces, the Eastern Cape has a marked comparative advantage

in the agriculture and community services sectors and a marginal

advantage in manufacturing and trade, as measured by the location

quotient.

From the perspective of sub-sectors the top performers have been

agriculture and hunting in the primary sector, transport equipment,

chemical and rubber products, metal products, machinery and household

products and electrical machinery in the manufacturing sector and retail

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trade, financial intermediation, services auxiliary to financial services,

and post and telecommunication in the tertiary sector. Notably, with the

exception of agriculture none of these sectors have been generating

employment at any significant scale.

3.2.4 Trade Performance

The most dramatic structural change that the Eastern Cape economy

has undergone in the post-1994 period is the shift from an inwardly

focused autarkic economy to an open, export oriented economy. This

shift is evidenced by booming exports. The growth in exports has been

dramatic, peaking at 250% of their 1996 levels in 2001. Indeed, despite

buoyant export growth in the national economy, the growth of exports in

the Eastern Cape has by far outstripped national aggregates, making it

the province with the fastest growing exports. In aggregate, imports grew

by 20% between 1996 and 2002, and accounted for 8% of South Africa’s

imports.

In 2002, 96% of exports and 98% of imports were of manufactured

goods. Agriculture accounted for 4% of exports and 2% of imports. The

transport equipment sub-sector accounts for more than two-thirds of

exports and imports and is the fastest growing export sector. Other

significant and fast-growing sub-sectors are metal products, machinery

and household appliances, furniture and textiles, clothing and leather

goods.

3.2.5 The Spatial Distribution of Economic Activity in the Eastern Cape

The cause of high and growing rates of poverty and inequality in the

Eastern Cape become evident when the population of its 7 sub-regions

is compared to their contribution to provincial gross value added. While

the Nelson Mandela metro is home to only 16% of the Eastern Cape’s

population, it accounts for 44% of its gross value added. In contrast, the

Oliver Tambo DM, home to 26% of the province’s population, accounted

for a mere 10% of GVA in 2002. Per capita GVA is vastly unequal across

the 7 sub-regions. The per capita income of Alfred Nzo, the poorest sub-

region, is 12% of the richest sub-region, the Nelson Mandela Metro. As is

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the case with economic activity, poverty is inequitably distributed across

the province, with 82.4% of the poorest sub-region’s population, the

Alfred Nzo district council, living below the poverty line, while in the

Nelson Mandela metro only 38.6% of the population are below the

poverty line.

Growth has been vastly uneven among the 7 sub-regions. The Port

Elizabeth Metro has grown spectacularly, with its annual average growth

rate far exceeding the national average. The Western District Council

has grown at a rate of 2.4% per annum, close to the national growth rate

for the 1996 – 2002 periods. For the remaining DCs, growth has been

well below the national average. In the case of the Ukhahlamba and

Alfred Nzo DCs, average annual growth has been negative. Hence these

economies have been contracting, partly as a consequence of

deindustrialisation, as evidenced by a decline in the output of the

secondary sector. This has contributed to the deepening poverty and

inequality in the Eastern Cape. Critically, these sub-regions have fallen

behind in terms of national and provincial growth in the post-apartheid

period.

With regards economic structure, in the Nelson Mandela Metro and

Amathole DC, the secondary and tertiary sectors are dominant and have

underpinned the high growth rate of the former. In the four poorest sub-

regions, the primary sector is an important contributor to GVA because of

the role of agriculture. The services sector is the largest contributor to

GVA largely because it is dominated by government services. The

secondary sector is relatively small in these sub-regions and has been

contracting in the 1996 – 2002 period, suggesting that the poorer sub-

regions are undergoing a process of deindustrialisation.

The spectacular growth in exports emanating from the Eastern Cape is

concentrated exclusively in the Nelson Mandela Metro and the Amathole

DC, where the manufacturing sector is concentrated. Indeed, the Nelson

Mandela Metro accounts for almost two-thirds of the Eastern Cape’s

imports and exports. With the exception of the 2% of exports accounted

for by the Western DC, the remaining sub-regions are completely

excluded from export-oriented growth trajectory of the province.

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3.2.6 Nodal Developments

The following nodal developments are currently at various stages of

implementation in the Eastern Cape:

� Fish River SDI � Wild Coast SDI � Coega IDZ � East London IDZ

Given the vastly unequal distribution of economic activity and poverty

across the Eastern Cape’s 7 sub-regions, it is worth noting that only the

Wild Coast SDI is located in the poorer sub-regions. The Fish River SDI,

of which the Coega and East London IDZs comprise an integral part, is

focused on the Nelson Mandela Metro and East London (as opposed to

the Amathole DC). These nodal developments will be an important

means of attracting investment, both foreign and domestic to the Eastern

Cape. They also have the potential to set in motion a virtuous circle of

growth and development if agglomerations develop around anchor

investments.

The key to maximising the economic impact of nodal developments is to

strengthen linkages between anchor projects and the provincial

economy, in order to enhance employment multipliers and spread the

benefits of economic growth. The development of such linkages requires

policy interventions as it is naïve to assume at the outset that linkages

will automatically develop between large new Greenfield investment

projects and the local economy, particularly if the projects are located in

an IDZ environment. At the same time, such linkages are critical if

projects are to generate multipliers in the regional economy, thereby

setting in motion a virtuous circle of economic development.

From the perspective of labour markets and employment, the impact of

these nodal developments on unemployment will be marginal. In the

context of a broad unemployment rate of 47.6% and 1.1 million

unemployed people in 2002, the creation of an estimated 46,000

permanent jobs over the next 10 years is a proverbial drop in the ocean.

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The employment opportunities associated with these nodal

developments can, however, is vastly expanded if linkages with the

provincial economy are forged and deepened over time.

3.2.7 Overview of the Rural Economy:

The analysis of the rural economy is essential to the strategic review of

the Eastern Cape labour market as the majority of the Eastern Cape’s

population (63.5% in 2002, compared to a national average of 44.6%)

reside in rural areas, where the unemployment rate, in terms of the broad

definition, is highest and where the majority of the unemployed are

located. While the broad agricultural sector accounted for a mere 6.8% of

the provinces output in 2002, just over one-fifth of employment is in this

sector.

A large number of rural households in the Eastern Cape still depend on

the rural agricultural economy for various livelihood strategies, in a

context where the agricultural sector makes a smaller contribution to total

household income relative to other sectors. Indeed, the contribution of

the rural agricultural sector to total household income has undergone a

secular decline and there are no indications that this trend is set to

change.

The Eastern Cape’s rural economy comprises two major parts: a highly

developed technology-intensive commercial agricultural sub sector and a

small-scale underdeveloped subsistence agriculture sub sector. These

two agricultural sub-sectors exist almost as two separate economies.

The scale of farming in the two economies is highly unequal. There are

approximately 10 million hectares in the hands of 6,500 white

commercial farmers. This land is mainly under sheep, cattle, mixed, dairy

and vegetable production. The land area of what was Ciskei is a mere

800, 000 hectares, while that of the former Transkei is approximately 4,

280 000 hectares.

Detailed studies of livelihoods in the Eastern Cape show that most

households depend on multiple sources of income. Subsistence

agriculture generally contributes a relatively small proportion compared

to wages from both migrants and non-migrants. The latter accounts for

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between 60% and 80% of the income of rural households in the Eastern

Cape, with between a third and half coming from migrant remittances.

Pensions are the second most important sources of cash income

contributing between 10% and 20% to average household income.

Estimates of agricultural income in terms of both cash sales and produce

consumed within household show great variability, but most studies

estimate it to be between 10% and 25% of average household income,

of which the greater part is accounted for by direct consumption. This

may be an underestimation as longitudinal studies have revealed that

difficulties in measuring maize yields has led to a consistent

underestimation of the productivity of farming households.

Access to land, even relatively small plots, forests or communal grazing,

allows households to maintain a diversified livelihood strategy that

includes wage employment, pensions, agricultural production and

keeping livestock as a form of investment. Collectively, these strategies

enhance their ability to obtain a livelihood in adverse conditions. The

primary reason for cultivation is for household consumption and most of

the produce is consumed before harvesting time.

Broadly speaking, rural communities practice arable farming in two ways:

the cultivation of food gardens and arable farming. The former involves

households engaging in cultivation in the immediate vicinity of the house.

The contribution of food gardens to rural livelihoods should not be

underestimated. While yields are small, they represent an important

contribution to household food security.

In the second area of food production, where rural communities practice

arable farming on arable land, access to such land poses a major

challenge for most rural households. In general terms there has been a

decline in the quantity of arable land available to each household from an

average of 1.72 hectares in 1950 to 0.43 hectares in 1990, largely as a

result of `betterment planning’ and overcrowding. At the same time, the

proportion of households without land has increased from 10% to 40%.

As a consequence of the seasonality of agricultural production, there is a

scarcity of staple foods, including maize, in the majority of households

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during the August to February period. This coincides with the observation

that 95% of households rely on maize that is bought and not self-

produced during this period and that less than 5% of households are

self-sufficient for more than 6 months of the year.

Expenditure on food increases to more than 60% of total household

expenditure during this period. Although there is a general perception

that livestock in rural areas have little economic value in terms of sales

through formal markets, livestock ownership and production serves a

greater variety of functions than is the case in the commercial agriculture

system.

Livestock are used as draught animals (sometimes this is hired out) milk,

manure, dung as a sealant, dung for heating, bride-wealth, hides,

slaughtering, and for cash sales. While agriculture is an important

component of household food security and rural livelihoods, especially

for the poor, other sources of food and income have come to play an

equally important role. It is clear that poor rural households have

diversified their livelihood strategies by constructing a diverse portfolio of

activities and social support systems in their struggle for survival and to

improve their standard of living.

However, such diversification could be perceived as an indication of

increased household vulnerability, due to the failure of previous

livelihood strategies. The evidence suggests that there has been an

erosion of a fundamentally agrarian existence for the poor and an

increased reliance on non-farm and even non-rural incomes.

Employment trends are such that 21% of those employed in the Eastern

Cape are in the agriculture, hunting and fishing sector. In the commercial

agricultural sector there is a much higher proportion of permanent farm

labour than is the case nationally.

This suggests that employment in the commercial agricultural sector is

much more important as a source of sustainable employment and wage

income in the Eastern Cape than is the case in the rest of the country. In

contrast employment on farms in the former homelands is neither

sustainable nor a significant source of wage income. In a context where

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other sectors of the economy within the Eastern Cape have not been

expanding enough to provide a viable alternative to the poor performing

agricultural sector, access to land, and ownership of livestock remain

important for household livelihood strategies.

Policy interventions within the framework of Provincial Growth and

Development Strategy will be very important if the trend is to change.

The implementation and monitoring of sustainable land based

development programmes will remain critically important for a large

majority of the population in this province.

Ultimately, the dynamics of poverty and livelihoods within the communal

areas are integrally tied to the progress of the development agenda

within urban areas, the former ‘white’ commercial agricultural areas and

the future of small towns.

3.2.8 The Nature, Size and Composition of the Labour Force in the Eastern Cape

The data used to analyse the Eastern Cape’s labour market comes from

the September 2002 Labour Force Survey (LFS6). The Eastern Cape

sub-sample of LFS6 consists of approximately 10 000 people of working

age residing in 4 000 households.

Based on data from LFS6, it is estimated that the Eastern Cape has 3.87

million people of working age (15-64). Of these only 46.6% (±1.8%) are

estimated to be economically active (using the official or “strict”

definition). This is low when compared with the national labour force

participation rate of 56.7%. Of the economically active population in the

Eastern Cape, 590 000 or 32.5% (± 2.3%) are unemployed. This

unemployment rate is not statistically different from the national

unemployment rate of 30.5%.

Using the broad definition of economically activity and hence

unemployment the percentage of the population that is economically

active (using the broad definition) is estimated to be 60.0 % (± 1.4%) and

the number of unemployed to be 1.110 million or 47.6 (± 2.4%). This

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compares with a national broad labour force participation rate of 67.7%

and unemployment rate of 41.8%.

Thus, the broad definitions of participation and unemployment indicate

that in the Eastern Cape participation is significantly lower and

unemployment is significantly higher than in the country as a whole.

There is a great deal of variation in labour force participation and

unemployment rates across the province. In terms of the official definition

labour force participation varies from 26% in Alfred Nzo to 62% in

Cacadu and the Nelson Mandela Metropole, while the unemployment

rate varies from 19% in Ukhahlamba to 43% in Chris Hani. It is, however,

more pertinent to consider the proportion of the working age population

that are actually employed: Only one in three (31%) of adults of working

age is employed and this figure varies from 18% in Alfred Nzo to 49% in

Cacadu.

Labour force participation increases with higher levels of educational

attainment. While only 37% of those with no schooling are economically

active (using the official definition), 71% of individuals with matric and

86% of those with tertiary education are economically active.

Unemployment amongst those with tertiary education is considerably

lower than for other groups.

Unemployment declines sharply with age. Almost three-fifths (59%) of

the working age population in the Eastern Cape is under the age of 35

while the broad unemployment rate for this group stands at an alarming

60.7%. The informal sector is a major source of employment, with this

sector employing almost as many people as the private formal sector. In

the Eastern Cape it is estimated that approximately 432 000 people work

in the private formal sector, 218 000 in the public sector, 412 000 in the

informal sector and 136 000 as domestic workers.

In terms of broad economic sector, the composition of employment in the

Eastern Cape differs markedly from national trends. In particular,

agriculture accounts for a significantly higher proportion of employment,

as do private households (i.e. domestic work), construction and social

and personal services. In contrast, employment in manufacturing and the

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tertiary sector (i.e. wholesale & retail trade, transport and communication

and financial services) accounts for a lower proportion of employment

than is the case nationally. This starkly illustrates the fact that the sectors

that have driven the provincial economy’s growth have not been

absorbing labour.

More than two-thirds (69%) of the employed have less than a grade 12

education, while 18% have completed matric and 13% have

postsecondary qualifications. More than three-fifths of those with tertiary

qualifications work in the public sector. There are large returns to

education. Whereas the average salary for someone with less than

matric is R666 per month, this rises to R2831 p.m. for someone with

matric and R5677 p.m. for a worker with a diploma or degree.

Wages among those in the informal and domestic services sectors are

extremely low, with mean wages in these sectors in September 2002

standing at R365 and R285 per month respectively. Wages in the public

sector are higher than in the private formal sector for all workers other

than those with tertiary education.

In sum, the majority of the Eastern Cape’s labour force is African, rural

and unskilled. The spatial distribution of unemployment is such that it is

concentrated in the former homeland areas. Moreover, a high proportion

of jobs are in the low-wage, low-productivity informal sector indicating

that jobs are of a poor quality.

EC Employment and absorption rates and unemployment levels6

0

10

20

30

40

50

2001 2002 2003 2004 2005 2006

Eas tern Cape Province

AbsorptionRates

Unemployment

6 Source: Data obtained from Labour Force Survey: 2006

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NMB Employment Sectors7

N M B Em plo ym ent Sec t o rs

2%

23%

5%

16%

5%10%

21%

8%

10%

Agriculture; hunting; forestry andfishing

M ining and quarrying

M anufacturing

Electricity; gas and water supply

Construction

Wholesale and retail trade

Transport; storage andcommunication

Financial; insurance; real estateand business services

The above graph is based on the Census 2001 statistical information and

we expect that the picture would have changed given the presence of the

IDZ as well as development within the automotive industry around the

Nelson Mandela Bay.

3.2.9 Synthesis and Policy Implications

Policy-makers should also be cognisance of the fact that high and

growing rates of unemployment are a consequence of dynamics on both

the demand and supply sides of the labour market. On the supply-side,

increasing rates of labour force participation has significantly expanded

the number of job seekers, while the demand for labour has been

sluggish, particularly in the formal sector.

Consequently, a large stock of unemployed people has built up over

many years, and each year the economy is unable to absorb not only

this stock but also new entrants. Indeed, in terms of the ‘strict’ definition

at the national level the unemployment rate has grown by 10.5

percentage points between 1994 and 2002 (from 20% to 30.5%), and by

13.4 percentage points if the expanded definition is used. The causes of

unemployment in South Africa are manifold and complex.

7 Census 2001

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There is, however, substantial agreement that three factors are: trade

liberalisation, the skill composition of the labour force and the capital-

intensive nature of the South African economy. The experience of

unemployment in the Eastern Cape and its underlying causes is

consistent with the national experience. The dramatic increase in

manufactured output and exports that has supported the growth of the

tertiary sector has not given rise to the scale and nature of labour

demand required to redress growing unemployment.

What makes the unemployment situation in the Eastern Cape dire is the

large proportion of the population residing in rural areas. Hence, when

the broad definition of unemployment – which has a rural bias because it

includes discouraged workers – is used, the Eastern Cape’s

unemployment rate of 47.6% is significantly higher than the national

average of 41.8%.

3.3 The Impact of HIV/Aids on the Eastern Cape’s Economy and

Labour Market

While HIV prevalence among adults in the Eastern Cape is among the lowest of

the 9 provinces, the impact is likely to be severe, as it is concentrated in the 15-

49 age groups, which constitutes the bulk of the economically active population

and the core of Eastern Cape economy. This has negative implications for the

composition, size and growth of the labour force, as well as the province’s

capacity for effective human resource development.

Projected HIV infections, Aids deaths and Aids morbidity is estimated to grow at

a much higher rate than the provincial population. By 2010, the number of HIV

infections will peak at 1.2 million. The projections suggest that the Eastern Cape

is now in the middle of an extremely vulnerable period, as the sharpest increases

in infections are being experienced.

In terms of projected AIDS mortality, by 2010, 600 000 people in the Eastern

Cape will have died of Aids and approximately 200 000 will have contracted Aids-

related illnesses. On average, this will result in a steady population growth rate of

approximately 1% per annum. Given that rural populations generally have lower

HIV prevalence rates, the predominance of tribal areas (with the incorporation of

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the former Transkei and the Ciskei), farming villages and agricultural areas in the

Eastern Cape, may contain the spread of HIV infection.

This must, however, be balanced against the influx of migrant labourers, who due

to retrenchments may now be returning to these rural areas, thus leading to the

in-migration of HIV infections in rural areas. While this influence on HIV infection

rates is not well explored in the literature, it is likely to have a considerable

impact in the Eastern Cape. There are a range of demographic, socio-economic

and cultural factors that underpin the particular patterns of HIV/Aids in the

province.

There are some initial indications that male circumcision may have a protective

effect against the transmission of HIV. Given its widespread practice in the

Eastern Cape among the African Xhosa population, it may play a significant role

in reducing the overall HIV prevalence rate, compared to other provinces.

However, unhygienic circumcision practices, may in fact contribute to the spread

of the disease.

The following socio-economic characteristics of the Eastern Cape may play a

role in ensuring that the HIV/Aids burden falls disproportionately on those that

are the most marginalised, vulnerable and at a general socio-economic

disadvantage:

� High levels of poverty (particularly in former homeland areas); � High levels of unemployment; � Migrant labour and returning retrenched migrants; � High levels of male absenteeism from families and communities; and

Restrictive cultural traditions in terms of the social and economic status of

girls and women.

HIV/Aids impacts negatively on the national and provincial economy because

mortality rates are higher than they would otherwise be and this causes a

reduction in the labour force. Within the South African context, the costs of HIV

can be high for companies. Such costs could be in relation to the need for

companies to invest massively in HIV/Aids prevention programmes; putting in

place a vigorous EAP benefit; medical aid/insurance as well as costs towards

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sick leave, compassionate leave and providing contingency budgets for the

increased levels of absenteeism due to Aids-related deaths and illnesses.

As the cost-burden to companies, individuals, households and the state

increases, so does their vulnerability. The implications for the Eastern Cape’s

labour market are dire: in a context where the national labour force is projected to

decline by between 18 to 21 per cent by 2015, the costs related to HIV/Aids

morbidity and mortality (including increased labour turnover, losses in skills,

experience and productivity) will be onerous.

The epidemic is also likely to exacerbate unemployment among the unskilled.

This is because its disproportionate impact on the economically active population

will result in changes in the size and nature of the labour force. At a national

level, it is projected that the demand for labour, particularly for unskilled labour,

will decline due to the decline in economic growth. Hence the growth in

employment will be lower than would otherwise be the case.

Moreover, in a context of high and growing rates of unemployment both

nationally and in the Eastern Cape, the added Aids cost burden may pose a

further obstacle to job creation as companies attempt to shift the cost burden by

reducing staffing levels, or opting for capital substitution in order to protect their

profit margins. Public interventions to reduce HIV infection will be a critical

determinant of its impact on the labour market. As regards the efficacy of

preventative measures, the NMF/HSRC study(2002) reports that among Eastern

Cape respondents, 48.5 per cent reported public clinics and hospitals as the

main sources of condoms, while 20 per cent reported non-specific sources. This

is an indicator of the essential role of public facilities in prevention messages.

The same study reported that 58.5% of Eastern Cape respondents knew where

to obtain VCT (Voluntary counseling and testing) services.

There are, however, indications that the province has not been successful in

establishing public VCT facilities: in 2002 the Department of Health reported that

there were only 6 public VCT facilities in the province. This translates into a ratio

of 0.08 VCT facilities per 100 000 population in the Eastern Cape, the lowest in

the country. More recently, it was found that despite a public advertising

campaign on free HIV/Aids testing, half of the Eastern Cape’s clinics could not

provide this service. Officials ascribed this to both a lack of training among

nursing staff and a lack of equipment. Hence public management capacity

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remains a challenge to implementing preventative measures in the Eastern

Cape.

In sum, the negative impact of HIV/Aids on significant sections of the Eastern

Cape’s population has profound implications for the province’s labour market and

its economic prospects. These should be factored into provincial strategies and

plans in the areas of economic growth, employment creation and human

resource development.

Health Status of SA Population8

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� % - � � � - ( �� � & � � �� � � � � �� �� � � � � � � � �

- � � �� � � � � � �� � � � � �� �� � �� � � � � �� � � �

8 9 � : ' ' �, � � � � � �� � �� � � � �� �� � �� � � � � �� � � �

� % - � � �� � * � � �� � � � � �� �� � �� � � � � �� � � �

� ' � � ( ; � �� � �� � � � �� �� � �� � � � � �� � � �

� & ' � � � ( ; � � �� � � � � �� �� � �� � � � � �� � � �

� � � & % & % � �� � � � � �� �� � �� � � � � �� � � �

�� �� �� �� �� �� ��

The figures on the above table are based on the number of people sick on the

day of the interview. The figures reflect all sicknesses and are not reflection

HIV/Aids prevalence. The Eastern Cape had nearly 12% of its population sick.

3.4 HRD Profile of the Eastern Cape

The Human Development Index (HDI)9 of the Eastern Cape (0.49) indicates high

levels of underdevelopment, corresponding with the high poverty levels in the

province. The highest levels of underdevelopment are measured for the former

8 Source: LSF Survey 2006

9 Sources: Stats SA 1995; 2002

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homeland areas, OR Tambo and Alfred Nzo DMs, with HDIs of 0.42 and 0.44

respectively. The previously advantaged Nelson Mandela Metro has relatively

high levels of development, with an HDI of 0.65. This disparity goes some way

towards accounting for the very high Gini Co-efficient (0.61) in the Eastern Cape

– which mirrors the national co-efficient of 0.60.

0

10

20

30

40

50

60

%

No Schooling PrimarySchool

Less M atric M atric HigherEducat ion

Levels

Unem ploym ent Rates by educat ion levels : SA & EC (1995 & 2002)

SA 1995EC 1995

SA 2002EC 2002

The table above speaks to unemployment rates according to the different

Education levels. The worrying trend has been the rapid increase of

unemployment of university graduates. The increase in unemployed graduates

has been dramatic in the last five years. A recent study conducted by the

University of Cape Town indicates that most unemployed graduates are those

from historically disadvantaged education backgrounds. Whilst there are

numerous reasons for this current situation, the research conducted shows that

most of these are graduates in the social sciences, humanities and some fields in

commerce. The number of unemployed graduates has grown significantly in the

past five years. JIPSA seeks (see section of SD initiatives) ways of absorbing

unemployed graduates into the economy while addressing the mismatch in

relation to the type of training offered to these students as compared to skills

needed by the job market.

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NMB Education levels10

NMB Education levels

7%

13%

8%

39%

24%

9%

Noschooling

Someprimary

Completeprimary

Somesecondary

Std10/Grade12Higher

The graph above is based on Census 2001; possibly the picture has changed.

The changes in the structure of the education landscape have also impacted on

the Nelson Mandela Bay. The restructuring of the Port Elizabeth Technikon, Vista

University and Port Elizabeth University into a single mega institution has created

a new momentum in the growth of the only local university.

Another factor which has potentially changed the education levels within the

NMB has been the 2002/03 restructuring of the further education and training

sector, which saw the merging of 152 colleges into 50 multisite-campus FET

colleges. For the NMB this resulted in 2-government funded FET colleges that

have multi-satellite campuses spread across NMB. Within the general education

and training band there has also been a consolidation of the technical schools.

Over and above the changes in the education sector the department of labour

has been spearheading several skills development initiatives. These initiatives

will have a major positive impact on the Nelson Mandela Bay education levels, as

these initiatives also include Adult Basic Education and skills programmes.

The migration of people from other parts of Eastern Cape and South Africa to the

NMB, in search of employment opportunities as well as better jobs, will also

potentially increase the number of people with post-secondary education.

10 Data source: Census 2001

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3.5 Education Landscape: Overview

The national Department of Education is responsible for education across the

country as a whole, while each of the nine provinces has its own education

department. However the planning and management of FET colleges is

managed by the National Department of Education instead of the Provincial

Department of Education.

South Africa has 12.3-million learners, some 386 600 teachers and 26 292

schools, including 1 098 registered independent or private schools. Of all

schools, roughly 6 000 are high schools (grade 7 to grade 12) and the rest

primary (grade 0 to grade 6).

The National Department of Education provides a national framework for school

policy, but administrative responsibility lies with provinces. Power is further

devolved to grassroots level via elected school governing bodies, which have a

significant say in the running of their schools. Private schools and higher

education institutions have a fair amount of autonomy, but are expected to fall in

line with certain government non-negotiable - no child may be excluded from a

school on grounds of his or her race or religion, for example.

The greatest challenges lie in the poorer, rural provinces like the Eastern Cape

and KwaZulu-Natal. Schools are generally better resourced in the more affluent

provinces such as Gauteng and the Western Cape. Illiteracy rates are high at

around 24% of adults over 15 years old (6- to 8-million adults are not functionally

literate), teachers in township schools are poorly trained, and the matric pass

rate remains low.

The South African government is targeting education for the poorest of the poor,

with two notable programmes. One is fee-free schools, institutions that receive all

their required funding from the state and so do not have to charge school fees.

These have been carefully identified in the country's most poverty-stricken areas,

and will make up 40% of all schools in 2007.

3.5.1 Education Bands

South Africa's National Qualifications Framework (NQF) recognises three

broad bands of education: General Education and Training, Further

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Education and Training, and Higher Education and Training. General

Education and Training runs from grade 0 to grade 9. General Education

and Training also includes Adult Basic Education and Training.

The table below shows the different education bands as well as the NQF

levels within each band and the qualifications that obtainable after

completion of each level. This section gives a brief overview of the

institutional capacity and gives some detail relating to the further education

training (FET) band. The FET education band is critical for the training of

unskilled and semi-skilled workers.

GRADES NQF

LEVEL

QUALIFICATIONS

8 Doctoral degree

Masters degree

Honours Degrees

7

Postgraduate diploma

General 1st degree

Postgraduate degree

6

Bachelors degree

1st Diploma

Higher Certificate

Hig

her

5

Certificate

12 4 Diploma

11 3 Certificate

Fu

rth

er

10 2

Gen

er

al

R-9 1 Grade 9/ABET level 4

3.5.2 Further Education and Training (FET) (NQF Level 2-4):

This band offers grades 10 to 12, and includes career-oriented education

and training courses. There are different types of FET institutions -

technical colleges, community colleges and private colleges. Diplomas and

certificates are qualifications recognised at this level. The FET also offer

DoE and Non-DoE courses, the non-DoE courses are not accredited by the

national Department of Education but could be accredited by professional

bodies or tailor made according to industry needs.

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Until 2002 there were 152 technical colleges in South Africa, these were

merged with other technical colleges, colleges of education and/or

manpower training sites to form 50 new Further Education and Training

(FET) colleges. The merger process did not change the distribution of

college campus sites across the provinces, however there were some

changes in the configuration of the college sector.

A key feature of the newly configured colleges is that they have multiple

campus sites as well as satellite campuses. A majority of FET’s are located

in rural, peri-urban, urban and metropolitan areas. The location spread of

the FET colleges is similar to that of Higher Education institutions, with the

exception of the Limpopo Province which has a higher number of FET’s

compared to the number of higher education institutions in that province.

The tables below are based on 2000 data.

3.5.3 DoE and Non-DoE Programmes in FETs:

FET’s can offer both DoE accredited as well as non-DoE programmes. The

provision of non-DoE programmes is a proxy indicator of the extent to which

FET colleges are responding to new market opportunities. Non-DoE

programmes accounted for about 12% (16 853) of the total full time

equivalents11 (FTE) (138 712); however this distribution varies across

provinces. The Western Cape, KwaZulu Natal and Limpopo Province each

had more than 15% of their students enrolled in Non-DoE programmes,

Mpumalanga and Eastern Cape had 5% or less enrolled in such

programmes.

FTE Spread: DoE and non-DoE

11 Full Time Equivalent (FTE) means the number of Students determined by the Department of Education in any Year to be the full-time equivalent of the actual number of Students enrolled in any educational, cultural or recreational activity

34/144

2000 FET Programme Enrollment

0%

20%

40%

60%

80%

100%

KZN EC WC NC GP FS MP LP NW

non-DoE

DoE

3.5.4 National Certificate Vocational (NCV):

The NCV is a newly introduced three year programme. The first student intake was

in January 2007. It is a skills demand based programme. FET colleges are given a

go ahead to offer courses once they can prove that a specific skill is in short supply.

The NCV programme is offered in seven fields, including Electrical & Infrastructure

construction; Engineering and related design (Welding, Fitting and Machining and

Motor Mechanics) and Civil engineering construction. Learners are allowed one

language as well as a Maths or a Maths and Literacy course. Only students who

have successfully completed grade 9 can register in the programme. The NCV differs

from the noted programmes in that it has a 40:60 academic and practical percentage

split respectively.

The entry level of the NCV programme is at NQF level 2. At the end of the three

year programme, there are 3-streams. A learner can undertake a 2-year practical

training. The 2-year practical training is in the industry linked to the trade subject the

student specialised in. At the end of the 2-year practical training the student will

qualify as an artisan. Alternatively the students can continue and register for a

further 2-year in the college and undertake NQF level 5 & 6. The other alternative will

be f